U.S. DEPARTMENT OF STATE DISPATCH SUPPLEMENT
FY 1995 INTERNATIONAL AFFAIRS BUDGET REQUEST
VOLUME 5, NUMBER 2, FEBRUARY 1994
PUBLISHED BY THE BUREAU OF PUBLIC AFFAIRS
 
 
 
        FY 1995 International Affairs Budget Request
 
 
Statement by the Secretary of State
I am pleased to present what is truly the first post-Cold
War International Affairs budget.  For more than 40
years, this budget proceeded from the premise that our
overriding national security objective was the global
containment of Soviet power.  Even with the end of the
Cold War, the budget continued to define national
security in narrow terms, and failed to address the
problems and possibilities presented by the breakup of
the Soviet Union.  Now we have an opportunity--and a
responsibility--to remake American diplomacy and
reinforce American security in a new world unburdened by
superpower confrontation.  This budget reflects a new
outlook and projects new priorities appropriate for a new
era.
 
President Clinton's FY 1995 budget redefines national
security to meet the challenges we face today.  It
supports our core responsibility:  providing for the
security of our citizens through our defense forces and
global alliances.  It also broadens the concept of
national security by advancing America's economic
security and responding to the dangers posed by
environmental degradation, rapid population growth, arms
proliferation, illegal narcotics, and the ravages of
global poverty.
 
This redefinition of national security also requires
changes in the form of the FY 1995 International Affairs
budget.  The budget is divided into six mutually
reinforcing goals, consistent with those in the
Administration's proposed Peace, Prosperity, and
Democracy Act of 1994.
 
Promoting U.S. Prosperity
Ensuring our nation's economic security is the central
objective of the Clinton Administration and at the heart
of our foreign policy.  America's prosperity is tied
irreversibly to the growth and integration of the global
economy.  More and more Americans earn their living by
producing goods and services for overseas markets.
Exports are the fastest-growing and highest-paying sector
of our economy.  We are working aggressively to open
markets to American goods and services and to help U.S.
companies penetrate those markets.  We are investing
resources to expand opportunities for trade and
investment, promote economic growth and job creation, and
adapt the world trading system to an increasingly global
economy.
 
Our programs include those administered by the Export-
Import Bank, Department of Agriculture, Trade and
Development Agency, and Overseas Private Investment
Corporation.  At the same time, we are pursuing the most
ambitious international economic policy agenda in nearly
half a century.  Our successes in approving the North
American Free Trade Agreement, completing the Uruguay
Round of the General Agreement on Tariffs and Trade, and
raising the visibility and importance of Asia-Pacific
Economic Cooperation--along with our intensive efforts to
make progress in the Japanese framework talks--
demonstrate our resolve.
 
 
Building Democracy
In his State of the Union Address, President Clinton
noted that ". . . the best strategy to ensure our
security and to build a durable peace is to support the
advance of democracy elsewhere."  Building democracy and
supporting market reforms in the new independent states
of the former Soviet Union and in Central and Eastern
Europe are together a high priority and in the clear
self-interest of the United States.  We should not forget
the dangers we have so recently faced, nor the resources
we were forced to spend to secure freedom.  We must avoid
a return to confrontation and instability.  Americans
will be more secure and prosperous if democratic
institutions and market economies take hold.  This is a
long and difficult process that will require not only
assistance but also patience.  But the rewards of
success, measured against the costs of failure, will more
than justify our steady efforts.
 
We are also assisting emerging democracies in Africa and
Latin America.  Our commitment to democracy and human
rights reflects not only our values, heritage, and
cultural ties; it also is consistent with and reinforces
our national interest.  Nations that respect human rights
and adhere to democratic principles tend to be the
world's most peaceful and stable.  Democracies make
better partners in diplomacy, arms control, and trade.
They are also more likely to cooperate on global issues
such as the environment, narcotics, and terrorism.
 
To articulate and amplify our support for democracy and
market economies, we must harness today's communications
technology.  The U.S. Information Agency is restructuring
its priorities and capabilities so it can continue to
play an effective role.
 
 
Promoting Sustainable Development
We have paid too little attention to the interlocking
threats of rapid population growth, poverty, and
environmental degradation.  At stake is the quality of
life of future generations, both at home and abroad.  For
instance, greenhouse gases emitted in Brazil are as
dangerous to the future health of Americans as gases
emitted in Ohio or anywhere else in our country.  Yet the
costs of further cutting emissions within the United
States are four times higher than making comparable
reductions in Brazil.
 
For the sake of our long-term national and economic
security, we must help shape a comprehensive approach to
these issues, while encouraging democracy.  This approach
is captured in our overall goal of promoting sustainable
development.  As in other areas of the International
Affairs budget, relatively small investments and cost-
effective programs today will yield substantial savings
tomorrow.
 
Our bilateral economic assistance programs help build
markets overseas for U.S. companies.  Exports create jobs
for Americans and offset in part the investments we are
making in sustainable development.  The developing
countries now account for almost half of the world's
economic activity, and they are the fastest-growing
export market for U.S. goods and services.  In the case
of South Korea, for instance, America now gets back in
export sales each year triple the amount of assistance we
provided to South Korea over a decade.  And South Korea
now has its own program to aid other nations.
 
Fortunately, the United States is not alone in trying to
address these issues.  The multilateral development banks
and the International Monetary Fund are essential to
advancing market reforms, attacking poverty, reducing
population growth, and protecting the environment in both
the developing world and countries in transition.
Because of their support from many donor countries and
their ability to borrow money on world capital markets,
multilateral banks are by far the largest source of
development finance, making $45 billion in loans in 1993.
This magnitude of funds gives them substantial influence
in promoting difficult but necessary policy changes in
developing countries such as fostering legal frameworks
that encourage private enterprise.  The United States
makes periodic commitments of funds to these
institutions, which, taken together, lend over 20 times
the U.S. contribution level.
 
These multilateral efforts, coupled with our bilateral
programs and those of non-governmental organizations,
help advance American security by reducing the causes of
instability in recipient countries, as shown by our joint
special efforts in the former Soviet Union and Eastern
Europe, sub-Saharan Africa, and the Middle East peace
process.
 
Promoting Peace
Preventive diplomacy and efforts to promote peace remain
critical elements of our national security policy.  Our
support for the Middle East peace process continues more
than two decades of bipartisan diplomatic engagement and
financial investment in the region and builds upon the
historic breakthrough made for peace last year.  Now we
must sustain our support for peace in a region in which
the United States maintains enduring strategic and
economic interests.  We also must respond to regional
security challenges.  Our economic and military
assistance for Greece and Turkey helps stabilize this
potentially volatile region.
 
Multilateral peace-keeping efforts are simply one of
several U.S. foreign policy tools and allow us to
leverage our capabilities and share security
responsibilities and burdens with other countries.  This
budget funds anticipated peace-keeping requirements in FY
1995 as well as a portion of anticipated FY 1994
shortfalls.  The budget is based on the concept of shared
responsibility between the State and Defense Departments
for managing and funding peace-keeping operations.
 
Multilateral peace-keeping is not a panacea.  It cannot
substitute for unilateral or alliance action when that is
what America's national interest requires.  And, it must
be employed only to advance clearly defined objectives.
As the President set forth in his September 1993 address
to the United Nations, the United States will insist that
any potential operation be subject to very careful
consideration and planning.  We are working with other UN
members to improve the UN's ability to manage peace-
keeping operations.
 
International affairs resources also will be used to
prevent the proliferation of weapons of mass destruction
and other dangerous arms, a top priority goal.  We are
working with other nations to seize illegal drugs and to
counter terrorists abroad.  These programs aim to stop
illegal drugs before they get to our shores, and are at
the same time highly cost-effective.  The cost of seizing
drugs in Bolivia is one-tenth the cost of a similar size
seizure in the United States.  Similarly, the price of
our anti-terrorist efforts pales in comparison to a
single terrorist act such as the World Trade Center
bombing last year.  In both cases, this is money well-
spent on behalf of the safety of Americans.
 
Providing Humanitarian Assistance
Humanitarian assistance programs will always be part of
our foreign policy because they reflect our values.  This
assistance also reinforces our sustainable development
strategy.  Our FY 1995 budget provides significant
resources for refugee, food assistance, and disaster
relief programs.  At the same time, our other budget
objectives designed to promote peace, foster economic
growth, and consolidate democracy help reduce future
needs for humanitarian assistance.
 
Advancing Diplomacy
Our diplomacy and our involvement in international
organizations are vital to achieving America's broad
national security goals.  The skills of the people who
manage and execute our foreign policy and international
programs are especially important to achieving these
goals.  Our diplomatic infrastructure is adapting to
changes in the world.  We are upgrading our commercial
and other services abroad to give greater overall
attention to economic issues and to provide support for
American firms and industries.  The Department of State
will shrink the size of central administrative staffs and
improve information management systems to streamline
program administration and upgrade its services.
Similarly, the Agency for International Development is a
"reinventing laboratory" under the President's National
Performance Review as it revises its structure and
prepares to carry out its mandate in the coming decade.
 
The FY 1995 budget is consistent with our commitment to
submit a budget within the limitations imposed by the
President's deficit-reduction plan.  It is an austere
budget which will continue the cost-cutting efforts of
the last several years in which we closed 22 overseas
State Department posts and have begun closing 21 USAID
missions.
 
We present the FY 1995 International Affairs budget to
advance commitments we made last year to realign our
priorities, reorient our budget, and restructure our
institutions in ways that will promote our broader
concept of national security.  This budget consists of
six parts linked by a consistent theme:  investing in the
security of Americans.  In each case, the costs of
failing to act exceed, by far, the costs of pursuing
these policies and implementing these programs.  In this
budget, as in the Administration's domestic programs, we
have put people--the American people--first.
 
Warren Christopher
 
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FY 1995 International Affairs Budget:  A New Outlook and
New Priorities for a New Era
 
Summary
The President's FY 1995 International Affairs budget
reflects a new account structure consistent with the
Administration's proposed Peace, Prosperity, and
Democracy Act of 1994 and U.S. post-Cold War foreign
policy objectives.  It is organized under six categories
which parallel the titles of the new Act (or charter) and
which represent fundamental, mutually reinforcing policy
objectives:
 
--  Promoting U.S. Prosperity Through Trade, Investment,
and Employment;
--  Building Democracy;
--  Promoting Sustainable Development;
--  Promoting Peace;
--  Providing Humanitarian Assistance; and
--  Advancing Diplomacy.
 
In addition to the FY 1995 International Affairs
appropriation request, the budget proposes a supplemental
appropriation for FY 1994, to be fully offset by
decreases in other expenditures, for unfunded assessed
peace-keeping costs.
 
The total International Affairs (Budget Function 150)
appropriation request for FY 1995 is $20.861 billion in
budget authority.  This is an increase of $44 million
from the FY 1994 level, including the proposed FY 1994
supplemental appropriation of $670 million and proposed
offsetting rescissions for the same year.  The request
totals $20.788 billion in outlays, or a decrease of
$1.052 billion from the FY 1994 level.
 
 
[EDITOR'S NOTE:  Pie chart titled "FY 1995 International
Affairs Budget $20.861 Billion in Budget Authority" and
the bar graph titled "FY 1995 International Affairs
Budget Authority and Outlays" are available in the paper
copy of this Dispatch issue.]
 
(###)
 
 
 
 
[Table 1 "FY 1995 International Affairs (Function 150)
Budget Request" is available in the paper copy of this
Dispatch issue.]
 
 
(###)
 
 
 
Budget Highlights by Major Area
 
Promoting U.S Prosperity Through Trade, Investment, and
Employment ($1.038 Billion)
 
Export promotion programs seek to establish, maintain, or
expand markets for U.S. goods and services, thereby
creating new jobs for American workers and enhancing
American prosperity.  Exports account for 50% of our
total agricultural output and 85% of the recent growth in
manufacturing.  Export-related jobs are the fastest-
growing and best-paying component of our key industrial
and service sectors.  These jobs pay over 20% more than
the average, and the penetration of new markets
accelerates technological advancement in the United
States by stimulating the development of new products and
services.
 
Expanding the opportunities for international trade has
therefore assumed unprecedented importance in our foreign
policy, as demonstrated by the passage of the North
American Free Trade Agreement, the convening of the first
Asia-Pacific Economic Cooperation (APEC) summit, and the
completion of the Uruguay Round of the General Agreement
on Tariffs and Trade (GATT) negotiations with 116
nations.  There are a number of federal programs that
promote U.S. trade.  Those funded in the International
Affairs budget function are discussed below.
 
 
Export-Import Activities
The Export-Import Bank (Eximbank) finances U.S. exports
to developing countries and emerging markets through
direct loans, loan guarantees, and insurance programs.
Eximbank programs assist U.S. exporters by absorbing
reasonable credit risks that are beyond the reach of the
private sector and by matching officially supported
foreign credit competition.  Eximbank financing will help
U.S. exporters compete in expanding global markets.  This
is especially important in the potentially huge markets
represented by the former Soviet republics and the
emerging market economies in Central and Eastern Europe.
The Administration's FY 1995 request of $796 million will
allow for an increase in export financing to support an
expansion of U.S. exports, thereby stimulating economic
growth and jobs creation in the U.S.
 
 
Food Export Promotion
The U.S. Department of Agriculture (USDA) oversees Public
Law (P.L.) 480, Title I, a concessional sales program to
encourage overseas purchase of U.S. agricultural
products.  Sales are made on a credit basis at low
interest rates.  The most important criterion in
authorizing financing is the recipient country's market-
development potential.  Title I programs create important
markets for U.S. agricultural commodities--particularly
grains--thereby leading to U.S. job creation.  Recipient
countries generally are those in transition from being
food aid recipients to becoming strictly commercial
markets.  Eastern Europe and the new independent states
(NIS) are important examples of such markets, and our
export promotion programs are an important part of our
overall programs to sustain the transition to market-
oriented democracies in this region.  The Administration
seeks $312 million in budget authority for this program.
 
 
Trade and Development
The Trade and Development Agency (TDA) assists in
creating U.S. jobs by enhancing market opportunities for
U.S. companies in the infrastructure and industrial
sectors in middle income and developing countries.  It
works closely with foreign governments and other entities
to involve U.S. business in the early planning stages of
projects in these sectors.  This provides U.S. companies
with market exposure and information that assists them in
establishing a position in markets that are otherwise
very difficult to penetrate.  This is particularly
important in the emerging market-oriented democracies of
Central and Eastern Europe and the former Soviet Union,
where TDA is increasingly active.  The Administration is
requesting $45 million in budget authority for TDA.
These funds will be used specifically for feasibility
studies, often a key to U.S. private sector involvement
in the implementation stage of major projects.
Additional funds may be transferred to TDA from other
agencies for feasibility studies in the former Soviet
Union and other regions.
 
 
Overseas Private Investment
The Overseas Private Investment Corporation (OPIC) helps
the U.S. private sector create jobs and generate economic
growth both at home and abroad, fostering global
competitiveness and trade.  OPIC accomplishes this by
offering American businesses loans, loan guarantees,
insurance, and investor services to support a wide array
of U.S. investment in 140 developing countries and
emerging economies worldwide.  OPIC plays a particularly
important role in promoting defense conversion,
privatization, and market reforms in Central and Eastern
Europe and in the former Soviet Union.  OPIC is
undertaking new activities to encourage environmental
investment in the former Soviet states, Eastern Europe,
South Africa, West Bank/Gaza, and Latin America.  The
Administration is seeking $20 million for the agency's
credit activities and equity investment programs.  This
will generate about $20 million in direct loans and $482
million in loan guarantees.  The agency also earns
revenues from its insurance and other activities which
far exceed appropriated funds.  The Administration's FY
1995 request will return OPIC to operating as a self-
sustaining government corporation.
 
 
Building Democracy ($2.853 Billion)
Promoting democracy and pluralism abroad is a fundamental
U.S. foreign policy goal and is directly linked to our
prosperity and security.  By promoting and protecting
basic human rights and freedoms, the United States not
only honors the values on which it is founded, but also
furthers important national interests.  Democracies are
more reliable international partners.  They are less
likely to wage war against one another or to generate
refugees.  They are more likely to respect the
environment, seek sustainable development, and cooperate
on global issues such as narcotics and terrorism.
 
 
New Independent States of the Former Soviet Union
Support for economic and democratic reform in the former
Soviet states is among our most important foreign policy
goals.  Helping to ensure a successful transition to
market democracies in this region is vital to U.S.
interests:
 
--  Enhancing U.S. security through reduction of weapons
of mass  destruction and creation of new, peaceful, and
cooperative relationships with former adversaries;
--  Improving U.S. economic prospects by redirecting
resources from defense to domestic investments; and
--  Strengthening U.S. prosperity by fostering new
foreign markets and trading relationships.
 
The United States cannot lead the coalitions of external
supporters seeking to assist with denuclearization,
defense conversion, and environmental protection, as well
as economic stabilization, restructuring, and
privatization, without substantial and sustained American
financial contributions.
 
The $900 million proposed funding for FY 1995 in the
International Affairs budget will continue the technical
and humanitarian grant assistance to the new independent
states in support of the transition to market economies
and democratic governments.  These include support for
the privatization process in Russia and the other new
states; additional capitalization of the Russian
Enterprise Fund and establishment of such funds in other
new states; continued assistance for reform of
agriculture, housing, energy, and health sectors; and
assistance in dealing with the environmental and
humanitarian consequences of economic reform.  Funding
also will continue U.S. support for election reform; rule
of law programs; education and training; exchange
programs for students, entrepreneurs, and professionals;
and development of civil infrastructure--non-governmental
organizations,  professional associations, labor
organizations, and civic groups.
 
In FY 1995, resources to strengthen the U.S. diplomatic
presence in these countries (under the category of
Advancing Diplomacy) will be a vital element in our
strategy.  By investing in preventive diplomacy, we are
better able to reduce the risk of instability and
conflict within and among these states, as well as pursue
arms control, counter-narcotics, environmental, and other
agreements of mutual interest and concern.
 
 
Central and Eastern Europe
The process of democratic and economic development in
Central and Eastern Europe remains as important to U.S.
interests today as it did in 1989.  Until there is
security and democracy in Europe, global peace and
security will remain in jeopardy.  As elections in
Lithuania and Poland demonstrate, the political and
economic revolution in this region is not complete.  Its
success is essential in order to demonstrate that
democracy and the foundation of economic prosperity can
be built on the ashes of failed communist systems.
 
While we will soon begin redeploying resources from the
states where transition is most advanced--Poland,
Hungary, the Czech Republic, and Slovakia--a substantial
financial commitment to the region as a whole will
continue to serve U.S. interests.  The collapse of reform
would leave an unstable region on the doorstep of our
European allies and would be a serious blow to reformers
in the NIS.
 
The $380 million proposed funding for FY 1995 will allow
for new initiatives and continued support for
strengthening judicial systems and the rule of law,
minority rights, privatization (especially in the
financial sector), private business development, and
nuclear safety.  A new initiative is planned to
strengthen public and private local institutions capable
of mediating and negotiating conflicts at the grass-roots
level.  We also plan to increase resources devoted to
environmental concerns as countries achieve economic
stabilization and growth.
 
As with our assistance programs in the NIS, U.S.
assistance to the countries of Central and Eastern Europe
is used whenever possible as leverage to mobilize private
U.S. capital, goods, services, and expertise.  Western
private sector involvement is key to the successful
transformation of these economies, and our programs can
help the U.S. private sector take advantage of the unique
opportunities in this region.
 
 
Countries in Transition
Our FY 1995 budget proposal contains a new account,
pulling together bilateral and multilateral activities in
support of democracy heretofore funded from disparate
programs and funding sources.  This new program is
designed to advance democracy, free markets, and regional
stability.  It is in the interest of the United States to
nurture and sustain democratic development not only in
the NIS and the emerging democracies of Europe, but also
in Asia, Africa, and Latin America.  Small investments in
democracy programs can help ensure democratic transition
and consolidation in a number of developing countries.
Failure to respond effectively threatens not only the
future of these countries, but the security and economic
interests of the United States.
 
The modest $143 million FY 1995 budget proposal will
allow for targeted programs in Africa (training and
electoral assistance), Latin America (administration of
justice, military reform, consolidation of democratic
reforms, and institution-building), East  Asia/Pacific
(human rights/labor, reconstruction and institution-
building), and Central and Eastern Europe (primarily
democracy-oriented military training).  De-mining
programs will facilitate efforts to remove mines in
Cambodia,  Afghanistan, Central America, and at least
five African states, comprising some of the most densely
mined areas in the world where the costs in terms of
human tragedy and suffering are the highest.  Other key
elements of this small program are several small grants
to UN and Organization of American States (OAS) democracy
programs.
 
 
Information and Exchange
The free international exchange of information and ideas
is a necessary condition for the development of
democratic institutions, and is a critical and integral
part of our foreign policy strategy.  The United States
Information Agency (USIA) conducts the international
information, education, cultural, and exchange programs
of the United States abroad.  USIA increases
international understanding of American society and U.S.
foreign policy through personal contacts, academic and
leadership exchanges, distribution of books and
periodicals, English-language instruction, operation of
cultural centers, and radio and television broadcasting.
 
The $1.43 billion budget proposal will allow for
extensive restructuring and other measures recommended by
the National Performance Review, acceleration of the
shift to state-of-the-art electronic reference and
outreach services, streamlining electronic news and
policy information capabilities, eliminating magazine
production and exhibits, and combining speakers and
specialists programs with interactive Worldnet
television.  The proposal includes consolidation of
international broadcasting--ending administrative
duplication and saving resources in the future.
 
 
Promoting Sustainable Development ($4.974 Billion)
 
Multilateral Development Banks, IMF, and Debt Reduction
Multilateral institutions remain essential to the
continuing capability of the international financial
system to foster and support economic reforms and
development in a rapidly changing world.  This is
especially true in the face of serious government
resource constraints and enormous demands on world
capital markets.  Contributions to the multilateral
development banks (MDBs) are important instruments of
U.S. policy.  For every taxpayer dollar invested in the
MDBs, more than $20 in financing is generated.  The U.S.
economy also benefits from the long-term growth and
stability that MDB lending and technical assistance
promote.  Furthermore, U.S. companies earn a larger
proportion of MDB procurement contracts than those of any
other donor nation.
 
The FY 1995 budget requests a total of $2.109 billion for
the following:  about $2.0 billion for contributions to
the MDBs, including funding (still under negotiation) for
the World Bank's Global Environmental Facility; $100
million for the International Monetary Fund's (IMF's)
Enhanced Structural Adjustment Facility (ESAF); and $7
million for bilateral debt reduction.  We will apply $87
million to U.S. arrears to the MDBs.  About $1.3 billion
of the request is for the U.S. contribution to the
International Development Association (IDA) to alleviate
poverty and encourage good governance and sustainable
development in the world's poorest countries.  ESAF plays
a crucial part in stabilization and structural reforms in
impoverished countries, particularly in Africa.  Lastly,
proposed debt relief funding will lower developing
countries' bilateral debt to the U.S. Government,
provided they are pursuing economic reform programs with
the IMF and World Bank.
 
 
State and USAID Programs
The President's request for FY 1995 includes $2.591
billion to support bilateral programs and contributions
to international organizations for broad-based economic
growth, protection of the global environment,
stabilization of world population growth, and support for
democratic participation.  These programs are dedicated
to long-term improvement of the quality of life in
developing countries, and to creating better trading
partners and customers for U.S. products.
 
Broad-Based Economic Growth (including P.L. 480-Title
III).  A total of $1.477 billion is proposed for programs
aimed at promoting economic growth around the world,
contributing directly to U.S. employment.  These
encompass a wide range of activities such as credit,
education--especially for girls and women--health, child
survival, AIDS prevention, agriculture and nutrition,
employment generation, and macroeconomic and sector
reform.  They invest in the development of markets,
institutions, and people, with the common objective of
fostering economic growth.  A total of $1.247 billion is
requested for USAID bilateral programs, and $230 million
for contributions to international organizations.
 
Stabilization of World Population Growth.  Slowing
population growth is a critical component of the
Administration's commitment to sustainable development.
Comprehensive strategies to reduce population growth
around the world will promote economic, political, and
social stability and progress; help ease environmental
strains; and enhance the quality of life for individuals.
The Administration requests $585 million for support of
voluntary family planning, reproductive health care, and
directly related activities.  Of this amount, $525
million will fund USAID activities and $60 million will
fund those of the UN Population Fund.  These core
population programs are complemented by investments in
broad-based economic growth that support strong and
sustained programs in child survival, HIV/AIDS, female
education and health, and the economic empowerment of
women.
 
Protection of Global Environment.  One of the critical
priorities of the Clinton Administration is to reduce
long-term threats to our environment.  A request of $350
million is being made for programs for reducing long-term
threats to our global environment.  Problems to be
tackled include climate change, loss of biodiversity,
pollution, ozone depletion, and lax environmental
standards.  Of this amount, approximately $57 million
will be provided for U.S. contributions to international
organization programs, specifically for the UN
Environment Program Fund and the Montreal Protocol
Facilitation Fund.  A request of $293 million is for
USAID programs for reducing natural resource degradation,
reducing greenhouse gas emissions, and supporting
biological diversity, among other areas.  The request for
multilateral development banks includes funding for the
World Bank's Global Environmental Facility (GEF), for
which negotiations are still underway.
 
Support for Democratic Participation.   Development must
also be linked to improving democratic institutions and
processes.  Activities promoting democratic participation
are integral to ensuring sustainable development and
other international affairs programs.  For example, in El
Salvador, democratic participation activities such as
judicial reform and civic education are essential in the
context of the peace and reconciliation process.  For
activities that foster democratic participation
worldwide, $179 million is requested.  Assistance will be
provided for the strengthening of human rights
observance, free and fair elections, respect for the rule
of law, accountable government, and public awareness in
such areas as narcotics abuse and environmental
protection.  Of this amount, $168 million will fund USAID
democratic initiatives and $11 million will fund U.S.
contributions for activities of the Organization of
American States.
 
 
Peace Corps, Inter-American Foundation, and African
Development Foundation
 
Peace Corps funding of $226 million will provide direct
and indirect support for about 7,000 Americans engaged in
voluntary services in about 95 countries worldwide.
These volunteers will continue to fill the trained labor
needs of developing countries and encourage self-
sustaining development of skilled labor.  As in the past,
Peace Corps activities will promote mutual understanding
between the peoples of the developing world and the
United States, focusing on voluntarism and self-help at
the grass-roots level.  For FY 1995, the Administration
requests a small funding increase to support expanded
efforts in the former Soviet Union.
 
In FY 1995, the African Development Foundation (ADF) will
continue to support self-help efforts of poor people in
African countries.  It will focus on activities at the
local level designed to promote opportunities for
community development.  Funding of $17 million,
equivalent to the FY 1994 level, will sustain grants,
loans, and loan guarantees to African private groups,
associations, or entities involved in self-help
development.
 
The Inter-American Foundation (IAF) will provide grants
to private, grass-roots organizations, including
community associations and small urban enterprises, to
foster economic self-sufficiency.  The IAF will also
provide such groups with credit, technical assistance,
training, and marketing services.  The $31 million
funding requested for FY 1995 is the same as last year's
request.
 
 
Promoting Peace ($6.431 Billion)
The end of the Cold War has reduced global tensions to a
marked degree, but it has not spelled the end of regional
instability or potential for conflicts which directly
threaten U.S. interests.  In particular, it has not
eliminated the need to seek a just, lasting, and
comprehensive peace between Israel and its neighbors.  In
a post-Cold War world engulfed in conflict, the United
States must be prepared to lead collective efforts to
deal with peace-making and peace-keeping and to meet its
international commitments to pay its share for these
activities.  The United States also has a responsibility
to strengthen and reform the UN peace-keeping function in
order to improve its ability to prevent conflict and
promote peace.  This will help reduce the risk that the
United States could be drawn into regional conflicts
which we cannot ignore.
 
 
Regional Peace and Security
Of a total of $5.46 billion for regional peace and
security, the Administration is seeking $5.225 billion to
advance the Middle East peace process.  The signing of
the Declaration of Principles last year was just the
beginning of a new stage in that process, which we must
continue to foster and support.  By far the largest
portion of this funding--$5.115 billion-- reflects our
continuing commitment to Israel's security and to Egypt's
vital role in the stability and security of the region.
Such funding is intended to support economic growth and
reform, and to help meet the legitimate defense needs of
these two countries.  An additional $75 million will be
used for economic development programs in the West Bank
and Gaza in fulfillment of our commitment to fund a share
of a multi-year, multilateral program in support of the
Israeli-Palestinian accords.  Another $30 million will be
devoted to small programs in support of other important
regional players in the Middle East Peace process,
including support for regional cooperation and for the
multilateral working groups, designed to augment progress
in the ongoing bilateral talks.
 
The FY 1995 proposal also includes a total of $160
million for credit programs for Greece and Turkey, which
finance the sale of defense equipment and services from
U.S. suppliers, and for grant economic assistance to
Turkey.  These programs provide important support for
regional security and our strategy of overseas presence,
including access, overflight, and base rights.
 
Of the remaining $80 million of the FY 1995 proposal, $24
million is intended for reimbursement of U.S. Department
of Defense costs; $44 million for small programs in
Ireland, Cyprus, and East Asia; plus a total of $12
million in military-related training worldwide.  The
modest training program provides significant, cost-
effective support for our strategy of engagement,
maintaining and creating new post-Cold War partnerships
aligned in their commitment to prevent or limit potential
conflict.
 
 
Peace-keeping Programs
The President's FY 1995 budget requests $608 million for
State Department accounts to support international peace-
keeping.  This is in addition to FY 1994 supplemental
appropriations requested by the Administration, offset by
reductions in other programs, intended to fund
outstanding peace-keeping assessments.  The President
proposes a new approach to fund assessed UN peace-keeping
operations by sharing such responsibility between the
State and Defense Departments.  In principle, the
President proposes that the Defense Department fund
"peace enforcement" operations as defined under Chapter
VII of the UN Charter, and the State Department fund
"peace-keeping" operations as defined under Chapter VI.
(The Department of Defense would also fund those Chapter
VI operations in which U.S. combat units are involved.)
 
The amount of $533 million is requested in the
International Affairs function of the budget for assessed
peace-keeping activities.  A total of $75 million is for
the peace-keeping operations (PKO) account to make
voluntary contributions to multinational peace-keeping
efforts such as the Multilateral Force and Observers
(MFO) in the Sinai, the Conference on Security and
Cooperation in Europe (CSCE) in the new independent
states, and Serbian sanctions enforcement.  Voluntary
contributions can be a cost-effective alternative to
paying the 30.4% U.S. assessment on UN peace-keeping
costs.
 
 
Non-proliferation and Disarmament
As the risk of superpower confrontation has receded in
the post-Cold War era, the potential use of weapons of
mass destruction--nuclear, chemical, and biological--by
regional powers and terrorist states continues to
increase.  Preventing the proliferation of such weapons
is a foreign policy priority, and the FY 1995 budget
proposal contains a combination of bilateral and
multilateral programs to pursue this objective.
 
The budget proposal of $111 million includes $61 million
in ACDA funding, $14 million of which is planned for CWC
implementation and $2 million related to implementation
of the NPT.
 
The Arms Control and Disarmament Agency (ACDA) plays a
key role in negotiating and implementing arms control
agreements.  It will continue to play this role in
addressing the numerous arms control, non-proliferation,
and disarmament challenges of the post-Cold War era.  It
will devote significant additional resources to expenses
related to implementation of the Chemical Weapons
Convention (CWC) and efforts to achieve the indefinite,
unconditional  extension of the Non-Proliferation Treaty
(NPT).
 
The proposal for the State Department's Non-Proliferation
Fund, a new account established in FY 1994, is $50
million, $40 million of which is intended as the U.S.
contribution to the International Atomic Energy Agency,
and $10 million for bilateral programs in support of
export controls and interdiction, weapons destruction,
and safeguards and verification.
 
In addition to FY 1995 funding proposed in the
International Affairs budget, the Department of Defense
plans to devote $400 million for non-proliferation and
weapons destruction in the former Soviet states.
 
 
Narcotics, Terrorism, and Crime Prevention
Illegal narcotics, terrorism, and other criminal activity
are major threats to the fabric of U.S. society and those
of many other nations.  In many developing nations, they
are major impediments to prospects for strengthening
democratic institutions, free market economies, and human
rights.  Combatting these threats is, therefore, a major
foreign policy objective of the United States.  The FY
1995 budget proposal of $252 million represents a new,
single account for this function, combining heretofore
separate appropriations for counter-narcotics, anti-
terrorism, and security assistance programs.
 
For counter-narcotics, $232 million of the total is
proposed to implement a new strategy directed toward
shifting resources from transit interdiction to more
sharply focused efforts in source countries.  We will
integrate our counter-narcotics program with sustainable
development initiatives, focusing on both macro and micro
objectives.  Assistance will be targeted in those nations
demonstrating the political will to combat illegal
narcotics trafficking and will assist in the creation and
strengthening of institutions--judicial and law
enforcement systems--indigenous interdiction, and
cooperative programs to deal with narcotics leadership,
money laundering, and chemical precursors.  The new
strategy reflects the reality that combatting narcotics
at their source is a more effective use of resources than
interdicting them in transit (though both approaches must
continue to play a role).
 
A total of $15 million will be devoted to anti-terrorism
assistance, providing training and assistance in airport
security, crisis management, and terrorist incident
control.  We are requesting $5 million to sustain the
second year of a new International Criminal Justice
program, dealing with the major aspects of international
criminal activity (financial, organized, and illegal
trafficking) and devoted to improving the administration
of justice in countries of national security interest.
 
 
Providing Humanitarian Assistance ($1.626 Billion)
The United States is the international  leader in the
provision of humanitarian assistance, reflecting the
compassion and generosity of the American people.
Humanitarian assistance is closely linked to our
sustainable development strategy.  Helping nations
respond to disasters also helps them to return to the
path of economic and social development.  The U.S.
provides humanitarian assistance and relief to refugees
and victims of natural disasters, famine, and drought and
to those suffering from the ravages of war.  While it is
difficult to predict where and when such crises and
disasters will occur, planning for FY 1995 requires
sufficient funding for pre-positioning quick reaction
mechanisms for providing assistance in such areas as the
Horn of Africa; the former Yugoslavia; and other regions
of Africa, Asia, Latin America, and Europe.
 
 
Refugee Assistance
The Administration's FY 1995 budget request includes $633
million for Migration and Refugee Assistance (MRA) and
$50 million to replenish the U.S. Emergency Refugee and
Migration Assistance Fund.  Objectives of this program
include the protection of refugees and conflict victims,
the provision of basic needs to sustain life and health,
and the resolution of refugee situations through
repatriation, local integration, or permanent
resettlement in a third country--including the United
States.  In carrying out these objectives, the Department
of State sustains a U.S. leadership role in the world
community in responding to refugees' and conflict
victims' needs.
 
Funds to assist refugees and conflict victims overseas
primarily support multilateral assistance efforts,
including the United Nations High Commissioner for
Refugees (UNHCR), the International Committee of the Red
Cross (ICRC), and the United Nations Relief and Works
Agency (for Palestine Refugees in the Near East--UNRWA).
Funds to support the resettlement of refugees in the
United States provide for up to 110,000 refugee
admissions, carried out through the International
Organization for Migration (IOM) and non-governmental
organizations.  In addition, funds support the
resettlement of refugees to Israel, migration assistance
programs, and the administrative expenses of the State
Department's Bureau for Population, Refugees, and
Migration.
 
 
Disaster Assistance
The Administration requests $170 million for
International Disaster Assistance (IDA), one of the most
visible U.S. international assistance programs.  USAID
coordinates disaster assistance to foreign nations
affected by natural and man-made disasters, concentrating
on activities which reduce human suffering and save the
greatest number of lives.  The high demand for relief is
driven largely by disasters that continue to have complex
political dimensions (e.g., Somalia, Bosnia).  Recent
experience shows that these disasters are difficult to
resolve and costly to address and that sufficient advance
funding must be provided to allow successful pre-
positioning of commodities and services.  Of this
request, $20 million will fund a new USAID program, the
Crisis and Transition Initiative (CTI).  Crises and
transitions have urgent requirements that traditional
programs of disaster relief, peace-keeping, and long-term
development do not address.  This rapid response
capability will enable USAID to assist governments in
maintaining basic government services and civil
authority, restoring essential infrastructure, and
sustaining democracy.  USAID will concentrate on planning
and coordinating programs that help nations return to the
path of sustainable development.
 
 
Food Assistance (P.L. 480-Title II)
Title II of the P.L.-480 Food Aid program administered by
USAID supports emergency and humanitarian food aid
programs implemented by private voluntary organizations,
the UN's World Food Program, and foreign governments.
Title II food assistance is provided largely to the more
vulnerable and dispossessed members of society, such as
lactating mothers and malnourished children.  The FY 1995
request totals $773 million; $390 million of this amount
is requested for non-emergency feeding and development
programs, with the remaining $383 million requested for
emergency feeding programs.
 
 
Advancing Diplomacy ($4.146 Billion)
The effective use of diplomacy--through reporting, crisis
prevention, and the adept use of membership in the UN and
other international organizations--is critical to success
in achieving all U.S. goals.  This budget is based on the
recognition that timely prevention is the most cost-
effective way to conduct foreign policy.  Through
membership in international organizations such as the UN,
the International Atomic Energy Agency, World Health
Organization (WHO), Asia-Pacific Economic Cooperation,
and NATO, the U.S. stands to better shape the future of
global development and retain its leadership position in
the post-Cold War world.  In addition, this budget
provides the core foundation for the conduct of U.S.
foreign policy.  Without adequate funds, we would have a
"hollow" foreign policy infrastructure inadequate to
respond to the challenges and opportunities of the post-
Cold War world.  In short, assertive, preventive American
diplomacy, including in the multilateral realm,
constitutes an investment in America's future.
 
 
State Department Operations
The State Department provides the diplomatic and
operational support to advance U.S. foreign policy
leadership.  Its people and missions are crucial
components of U.S. efforts to promote peace, prosperity,
and democracy in a changing world.  Over the past several
years, the Department of State has seen a dramatic
increase in its worldwide responsibilities due to such
factors as the opening of 26 new posts in the new
independent states and elsewhere, establishing programs
to enhance America's competitiveness in the global
economy, and responding to growing consular workloads.
Concurrent with meeting the diplomatic and consular
challenges of the post-Cold War world, the Department
also faces the operational mandate to reverse the erosion
in its infrastructure and begin a multi-year effort to
modernize its information systems, telecommunications
networks, and overseas facilities.  The Department has
instituted broad-based reform of its organizations and
operations to keep pace with changing times both here and
abroad.  Streamlining, more efficient decision-making,
investment in basic operational requirements, training,
and a division of labor that reflects post-Cold War
realities and our new global agenda are key elements of
this reform.
 
The FY 1995 request of $2.623 billion for State
Department Operations, an $88 million increase over the
FY 1994 enacted level, includes $2.177 billion for the
Diplomatic and Consular Programs and Salaries and
Expenses accounts.  The FY 1995 request will maintain
ongoing diplomatic and consular operations and provide a
modest investment increase which is key to our
streamlining efforts.  In addition, the FY 1995 request
strongly supports the President's plan for reducing
administrative overhead and employment by assuming
substantial savings in these areas.
 
The FY 1995 budget request also includes $422 million in
the Foreign Buildings account for the fourth year of
projects and activities programmed under the Department's
five-year plan to upgrade and modernize its inventory of
overseas diplomatic facilities.  In addition, the budget
requests $24 million for the Office of the Inspector
General; $42 million for State Department Small Programs
such as the American Institute in Taiwan and
International Conferences and Contingencies; and $74
million for Non-State Small Programs such as the
International Trade Commission, U.S. Institute of Peace,
and Asia Foundation.
 
 
United Nations and Other Affiliates
In the wake of the Cold War, the United Nations and other
multilateral bodies are taking on the most intractable
problems of the new era, such as ethnic conflicts,
aggression, genocide, famine, epidemics, refugees,
population growth, the proliferation of weapons of mass
destruction, global warming, poverty, and the survival of
democracy in the face of tyranny.  With strong U.S.
support, the UN can fulfill an important role in
responding to these international crises.
 
The President's budget includes $914 million for the U.S.
share of assessed contributions to the UN and other
international organizations.  The request recognizes
President Clinton's commitment to fund fully our
commitments to the United Nations and other multilateral
organizations and includes a small FY 1995 arrearage
payment.  Payment of arrears will be directed toward
activities that are mutually agreed upon by the United
States and the respective multilateral institutions, and
payments will be conditional upon such agreements.
 
 
USAID Operating Expenses
USAID operating expenses finance salaries and support
costs of its employees worldwide who are responsible for
designing and administering programs for sustainable
development, humanitarian assistance, and special
initiatives in such places as Southern Africa, Central
and Eastern Europe, and the former Soviet Union.
 
The funding requested is $567 million, including $40
million for operating expenses of the Inspector General.
The $23 million increase over the FY 1994 enacted level
for USAID Operating Expenses is required to fund three
major activities:  implementing the recommendations of
the National Performance Review and reinvention
activities, including the costs of closing 21 USAID
missions overseas; the mandatory federal pay raise; and
supporting USAID operations in the former Soviet
republics.
 
 
(###)
 
 
 
[EDITOR'S NOTE:  Table 2 "FY 1995 International Affairs
(Function 150) Budget Request" is available in the paper
copy of this Dispatch issue.].
 
(###)
 
END OF DISPATCH SUPPLEMENT, VOL 5, NO 2.
 
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indicated.  If not copyrighted, the material may be
reproduced without consent; citation of the U.S.
Department of State Dispatch as the source is
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